Oil prices continued to decline on Monday amid expectations of increased OPEC+ production beginning in October, coupled with signs of weak demand in China and the U.S., the two largest consumers of oil, which raised concerns about future consumption growth.
Brent crude futures dropped by 61 cents, or 0.8 percent, settling at $76.32 a barrel by 04:50 GMT. Meanwhile, U.S. West Texas Intermediate crude fell 52 cents, or 0.7 percent, to $73.03 a barrel. These losses came after a 0.3 percent decrease for Brent last week and a 1.7 percent decline for WTI.
OPEC+ production plans
The Organization of the Petroleum Exporting Countries (OPEC) and their allies, collectively known as OPEC+, are poised to implement a planned increase in oil production starting in October, as reported by six sources from the group to Reuters. Eight OPEC+ members are set to raise output by 180,000 barrels per day (bpd) as part of a strategy to gradually unwind recent output cuts of 2.2 million bpd, while maintaining other cuts through the end of 2025.
Demand concerns weigh on prices
Both Brent and WTI have experienced price drops for two consecutive months, as concerns over demand in the U.S. and China have overshadowed recent disruptions in Libyan oil supply caused by internal conflicts and heightened tensions in the key Middle Eastern producing region linked to the Israel-Gaza conflict.
Libyan supply disruptions
While Libyan exports remain on hold, the Arabian Gulf Oil Company has resumed production at up to 120,000 bpd to satisfy domestic needs, engineers reported on Sunday, following a standoff that had shut down most of the country’s oilfields.
Mixed signals from China
Further pessimism regarding Chinese demand growth emerged after an official survey indicated that manufacturing activity in China fell to a six-month low in August, with factory gate prices declining and businesses struggling to secure orders. However, a private survey released on Monday, which focuses on more export-driven companies, hinted at a tentative recovery in August.
U.S. consumption trends
In the U.S., oil consumption saw a slowdown in June, reaching the lowest seasonal levels since the COVID-19 pandemic in 2020, according to data from the Energy Information Administration released on Friday. Additionally, the number of active oil rigs in the U.S. remained unchanged at 483 last week, as reported by Baker Hughes in its weekly update.
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